Peer-to-peer lender RateSetter has allowed its lenders to withdraw from the platform without having to pay charges after revealing it is party to £76.5m worth of debt.
RateSetter announced the move after revealing the full extent of its “interventions” into other companies as it continues to wind-down wholesale lending.
In an update sent to investors, RateSetter’s chief operating officer Peter Behrens said: “If you believe this information changes your investment, we are giving you the option to review your investment with us and sell out without incurring any fees.”
The p2p lender ended wholesale lending originations in May, and acquired motor finance providers Vehicle Stocking and Vehicle Credit. In its investor update, RateSetter revealed both companies were grappling with debt of £24m and £12m respectively.
It also revealed £8.5m owed by Adpop, an advertising company which Vehicle Trading Group, Vehicle Stocking and Vehicle Credit’s parent company lent £12m to. RateSetter is now its sole owner.
Despite originally stating that it would lend directly to George Banco customers, RateSetter reneged on the deal to fund the guarantor’s customers in June citing better uses of its resources.
RateSetter told its investors that it would remain a “supportive but passive” shareholder in George Banco as it revealed the company owed £32m.
Luke O’Mahoney, PR manager at RateSetter, told Motor Finance: “We believe it is important for our lenders to be comfortable with their investment and aware of the risks on an ongoing basis of investing with RateSetter.
“As we recently announced changes to our relationships with former wholesale borrowers, we wanted to provide a full update to lenders on interventions with those borrowers and give lenders an opportunity to review their investments.”
He claimed that the default rate on outstanding loans was unaffected, and that RateSetter’s Provision Fund was sufficiently large to cover all expected losses.
The lenders have until 17 August to take up the offer, and were warned that it was subject to other funds in the market being able to replace them.